This section provides an overview of the results of the interviews per category of point for improvement, as identified in the literature review.
The role and organization of purchasing
Concerning the recognition of the relevance of purchasing by top management and the role the Purchasing Department fulfills at the hospital, the team leaders, and department head are quite satisfied. The department head is in the position to exert influence, reports to the financial directors and meets with members of the board of the hospital. On the other hand, the interviewed purchasers indicate that the Purchasing Department is mostly considered important due to the savings that can be realized. The additional value presented to the organization by the Purchasing Department could be exploited better. Purchasing is too often seen as a hurdle to take.
Regarding the central organization of purchasing combined with decentralized ordering, this division is (partially) present at the UMCG. The Purchasing Department is in charge of the purchasing process, supplies and services purchased have to run through the central Purchasing Department. Currently, GHX, a system to automate the supply chain, is used as a decentral ordering system in which one or several staff members at a department can place orders. In case of the laboratories, unfortunately not each laboratory can access or is willing to use GHX. Another difficulty is that suppliers cannot selectively choose which articles are displayed from their assortment on GHX and which are not. This causes internal customers to order supplies through GHX while contracts with other suppliers for these products might be in place. It is agreed that all employees responsible for ordering should be able to enter the system, and clear outlines on what can be ordered through GHX are needed. The interviewed purchasers and administration staff indicate that the use of a system such as GHX should be stimulated. This reduces the workload of the Purchasing Department, making rooms for other activities.
The Purchasing Department is involved in several purchasing alliances. The most recent addition, the membership of Einkaufsgemeinschaft Kommunaler Krankenhauser (EKK), is considered a relatively concrete membership because it is result oriented and a vision is determined. For other alliances the Purchasing Department participates in, the usefulness is doubted by several interviewees. Though the initial idea might have seemed interesting, in their daily work the alliances have not proven to be useful to the purchasers. Clear choices should be made into which alliances time should be invested. It is pointed out that a purchasing alliance should not be a goal in itself, but a means to generate advantages.
Policy, direction of development, organization & goals
The head of the Purchasing Department is responsible for the strategic purchasing process at the UMCG. This includes determining the purchasing strategy, the organization of purchasing, formulating purchasing policy and goals. While the awareness of the importance of strategic purchasing at the UMCG has increased, a documented strategy, policy and goals, are not yet present. A clear and structured purchasing strategy should be in place according to all interviewees. A fit for the upcoming strategy and policy with the organizational strategy is sought, using the mission, vision, ambitions and goals of the UMCG for the coming years. Input for the strategy is provided by the team leaders, purchasers indicate the wish to be more closely involved in the development of the strategy and policy. It is also mentioned that communication of the current state of the policy should be improved, the staff is curious about the state of the policy. Information about the upcoming strategy and changes in policy remains rather vague, which is disapproved of because the strategy and policy are expected to change the work of staff members.
One of the points for improvement concerns development of long-term plans for the department which is considered a responsibility of the department head. Concerning the long-term development of the organization, the Purchasing
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Department was involved in drafting the Route 2020, the organization-wide vision document. This is considered useful, since the Purchasing Department can, once involved, contribute to achieving the goals of Route 2020. Another point for improvement applicable to the Purchasing Department, is the availability of clear guidelines, regulations, and procedures to structure each step of the purchasing process. The department head and the tactical manager are of the opinion the outlines of the purchasing process are sufficient, this is currently not the largest challenge. Concerning the details, difficulties are acknowledged, parts of the documentation are outdated and should be rewritten. However, the purchasers are of the opinion that the guidelines differ from practice and changes in the process have not been documented. An important observation raised is that the outlines do not fit the situation (anymore), it might be clear on paper but differences with practice are present.
The staff, roles, responsibilities, and education
Concerning the points on continuous training and education for the staff, a clear distinction between the department head and the staff is seen. While the department head is satisfied, most of the purchasers and administration employees indicate that few opportunities for training or opportunities to visit conferences are provided. It is realized that time and money have to be freed for training, this is not always possible. The administration staff feel as if they are not stimulated to develop themselves. The team leaders indicate that with the upcoming changes, it is important to prevent knowledge gaps from appearing. The necessary education has to be timely assured, shifting responsibilities will require training of the staff.
Both team leaders, purchasers and administrative staff consider it important that the department head focusses on strategic leadership and determines the direction in which the department is heading. With the upcoming major changes such as the implementation of the Electronic Health Records (EHR) and the ERP and many retirements, processes at the department will be affected. Guidance and clarity, currently not considered sufficient, are expected from the department head, communicated towards all employees. The outlines of the different jobs have faded over time, it is considered the responsibility of the department head to provide the clear directions that are longed for. A set of points for improvement focusses on the organization of the Purchasing Department, responsibilities, and activities of the different staff members, which is considered highly relevant by all interviewees. At the level of the tactical purchasing process for the laboratories, differences between documentation and practice are present. The purchaser is often not involved in specification and selection phase, but rather late in the purchasing process. While negotiations are performed, contracts are regularly not concluded. The purchaser does not have the time to maintain supplier relations, perform market research, propose standardization, evaluate policy effectuation or work on contract management.
The interviewees agree that purchasers are currently too much involved in the operational purchasing process, the purchaser performs administrative tasks. Authorization of orders, updating purchasing documentation, handling price differences, problems with billing and asking for tenders should not be performed by a senior purchasing. The purchasers would like a financial threshold under which the administration staff has more responsibility and can order supplies themselves. The purchasers indicate that their time could be spent better, on large projects and public tenders which require their expertise and consume much time. Separating the operational and tactical purchasing levels, different roles and entrusting the administrative staff with more responsibilities are considered possible solutions. The purchasers are of the opinion that if ‘their’ administration employee generates an order, the purchaser can rely on this information. Skills and the time spent on authorization and autographs could be spent better. An important observation raised, is that the work of the purchaser has changed in the past years. The evolving European tender laws, the increase in projects, and technological developments wanted at a UMC, influence the way of working. The purchaser is responsible for issuing European (public) tenders when the estimated contract value for the contracted period exceeds the determined threshold. The purchaser assists in composing the program of requirements, determining selection and awarding criteria and publishing the tender documentation. Issuing public
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tenders consume much time. However, the function descriptions and scope of the function have not been adapted to the current situation.
As for the administration employees, many administration employees have years of experience. The administrative staff of the laboratories clearly indicates the willingness to take more initiative and responsibilities. In the current situation, the administrative staff can order autonomously in case of an emergency delivery or through GHX, but otherwise they are dependent on the purchaser which slows the purchasing process. The administrative staff shows a willingness to take over tasks from purchasers, such as asking for tenders and meetings with internal customers. With clear guidelines and discussion op front, responsibilities could be transferred to the administrative staff with the implementation of the ERP.
All interviewees indicate that shared responsibilities between purchasers and administration employees exist. On paper, a separation is present between responsibilities, in practice there is not. According to several interviewees, this is partly due to the long time people worked at the department. Outlines slowly faded and people started to play by their own rules. A gray area emerged for which it is not clear who is responsible, this differs per purchaser and administrative staff members. Differences of opinion are present concerning the responsibilities, up to date, clear outlines are needed that create clarity.
Measuring and monitoring performance
The opportunities for improvement focusing on management information and performance indicators apply to the Purchasing Department. As is acknowledged during one of the interviews, in the first place the mindset concerning monitoring and improvement has to change. The transparency and trust, necessary to create an environment in which performance is discussed, are lacking. The current performance indicators, focusing on operational matters, should be complemented by indicators at a higher level according to the purchasers. Besides the yearly overview the purchasers indicate not be involved with the performance indicators, evaluation and actions on the operational indicators seem to be missing. Not all purchasers have a need for other indicators, if certain information is required, they look it up themselves. However, performance data and management information are in the current situation relatively difficult to access, with the new ERP this will hopefully improve.
The use of ICT
Concerning the improvement opportunities in the area of ICT, the UMCG is about to make major changes. An ERP should be implemented in May 2017, replacing many of the outdated systems in place at the Purchasing Department. The control of the purchaser might decrease since not all purchases will have to be approved of any longer. Therefore, clear agreements have to be made in contracts on what suppliers offer and when prices are allowed to increase. If not, contracts can easily be violated, and prices can increase unnoticed. Internal customer will have more possibilities to order their supplies through this system, which is considered great for the many laboratories across the hospital. Changes in the way of working are expected, not-automated activities at the Purchasing Department will disappear.
Restructuring the purchasing process
Formalizing the purchasing process for non-complex products is considered an applicable point for improvement by all interviewees. The purchasers emphasize that, with clear outlines, they could be less involved in purchasing the simple, standard products. It is expected that formalization will be stimulated by the new ERP. The idea of a financial threshold before a purchaser is contacted might be useful. Though the Purchasing Department provides a service to the internal customers, even if the product might not be expensive it could be important to the customer. Therefore, assistance in purchasing should always be available if a customer asks for it.
Purchasing cards are considered less relevant. Because of current GHX and future ERP system in which the authorized internal customer can place orders from the departmental budget, purchasing cards are not required. A threshold per order, or per period of time can be set by the department head in GHX. In practice, these limits are often not set. The selected staff members are clearly trusted, the largest pitfalls are building up an unnecessary stock or ordering a faulty product due to a typo. Concerning the specifics of purchasing services instead of supplies, this seems less
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relevant for the UMCG. For the laboratories not many services are bought, nor is the purchasing process considered different from purchasing supplies. Formalization is also considered less relevant for services due to the low frequency.
Purchasing portfolio and sourcing
The differentiation in purchasing supplies based on a portfolio is considered relevant by the interviewees. For the laboratories, this differentiation is currently not actively worked on. The purchaser does not have time available to actively differentiate and it has little priority, the purchasing process is functioning in its current state. For the medical cluster purchasers are more aware of the type of products purchased, strategic or leverage products, and try to treat the supplier accordingly. The purchasers acknowledge that active differentiation could also be made concerning investing in the collaborative relationships with suppliers. Actively managing supplier relations is not performed by the purchaser, though this is described in the function description, due to a lack of time and a lot of suppliers present. Decisions on local and global sourcing should be made consciously, per category of supplies. For certain specific supplies, there is little choice in the matter. For categories of supplies for which several options are present, advantages and disadvantages should be weighed. Concerning in and outsourcing, this is not very relevant for the laboratory supplies but is relevant to other areas of purchasing. The policy and current considerations concerning these decisions should be communicated.
Managing suppliers and contracts
The interviewees acknowledge that market research is not required for all purchases; internal customers and purchasers are familiar with the suppliers. However, for less common or new products, market research should be performed according to the interviewees. Advantages could be achieved in these cases if more knowledge about the supplier market is present. Though market research is in the scope of the purchasers’ function, the purchasers indicate that time for market research is often not available. Sometimes market knowledge is lacking, both on the side of purchasing and the internal customer resulting in suboptimal purchasing performance. In these cases, purchasers want to free time to be able to perform market research.
For both the medical area of purchasing and for the laboratories, the supply base has to be balanced. The interviewees indicate that a reduction of suppliers is necessary and possible. Reducing suppliers is officially in the scope of the purchasers function, in practice, the purchaser does not have time available to do so. For the laboratories, especially for the research laboratories, (exotic) products are ordered from many small suppliers. These suppliers do not gain focus when savings have to be realized, due to the limited amount of money spent at the individual suppliers. However, in total a significant amount is spent at these small suppliers , and it is expected that savings can be realized if these suppliers are reduced. Indirect costs of purchasing are relatively high for these suppliers of small spend because of the need to create suppliers in the IT system and contact these suppliers for relatively small amounts of spend. Reducing these suppliers is difficult. However, intermediate firms such as Bio- connect, serving as a contact between small firms abroad and the hospital, can contribute to a solution. A difficulty is that the internal customer pays for the handling and shipping fees while they do not pay for time spent by the purchasing department generating a new supplier and working with small suppliers. The intermediate firms provide an overlapping assortment, and the administration staff would like to reduce the amount of these large firms. Negotiations are mainly performed by the purchaser, sometimes in collaboration with the internal customer if product specific knowledge is needed. Diversification in negotiation styles with different types of supplies is expected to lead to advantages. For the laboratories there is currently no time available to do so, it is not a priority. Due to many long-standing relations and standard discounts, the degree of negotiations differs per supplier.
Due to the General Data Protection Regulation (GDPR), aimed at strengthening data protection within the EU, contract management at the UMCG is receiving increased attention. Currently, actual contracts are not consistently concluded with suppliers, discounts are arranged or prices are agreed on. ‘Contract control’ is performed, instead of contract management, as the time approaches that a contract is about to end, the purchaser receives a notification.
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Concluding contracts for the laboratories is complicated, due to the large amounts of money spend in this area of purchasing, for many supplies public tenders should be issued. However, issuing tenders takes much time. For both the medical area of purchasing and the laboratories, issuing these public tenders is preferably avoided. The purchasers acknowledge it is important to perform contract management, however this will also take much time. In case contract management is added to the responsibilities of the purchaser, other issues will be neglected. Compliance to the concluded contracts with clear agreements on prices is considered important. Investing in selected long-term collaborative supplier-buyer relationships and concluding long-term contracts and blanket contracts are considered points for improvement at the UMCG. A differentiated approach to suppliers is needed, time has to be made available to select and invest in such relationships. However, partnerships with suppliers might be complicated because of the obligation to perform public tenders. Long-term and blanket contracts can also turn into public tenders, the purchasers are careful not to generate too much work for themselves.
Communication
Besides the department head, all interviewees consider the internal communication an area in which improvements should be made. The team leaders indicate that communication between the administration staff and purchasers should improve. The hallway is, in some cases, considered a line across which communication is minimal. This leads to inefficient and ineffective processes. The purchasers indicate that information from the two team leaders towards two teams of purchasers and administrative staff is not provided at the same time, which is confusing. The